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Morningstar cuts rating on Mobius' Templeton EM fund
November 3, 2015 / 9:52 AM / 2 years ago

Morningstar cuts rating on Mobius' Templeton EM fund

LONDON (Reuters) - Fund research company Morningstar said on Monday it had cut its analyst rating on Templeton’s Emerging Markets Investment Trust to Neutral after the departure of Mark Mobius as the fund’s lead manager.

Emerging markets veteran Mobius had said in July he would step down from his role at the investment trust from October, while continuing to lead Templeton’s broader emerging markets group. The trust was worth £1.4 billion at the end of September.

Morningstar had at the time rated the fund Bronze - the third highest positive rank after Gold and Silver. These ratings reflect an analyst’s conviction that a fund can outperform its peer group or a benchmark on a risk-adjusted basis over the long term. Those three grades are followed by Neutral and Negative.

The rating was placed under review after Mobius said he was handing over day-to-day management of the trust.

Jeremy Beckwith, Morningstar’s director of manager research, UK, said that while the trust’s new leaders, Carlos Hardenberg and Chetan Seghal, were experienced investors, neither had run a large-cap global emerging markets fund.

“In addition the Templeton Emerging Markets investment process is changing, and this fund will now be run on a more diversified and risk-conscious basis than previously,” Beckwith said.

“With a restructuring of the relationship between analyst and portfolio managers as well, there is too much change occurring on this fund to warrant a positive rating.”

Franklin Templeton did not immediately comment in response to the announcent.

Emerging markets have performed poorly this year as a result of slowing economic growth across the developing world and the potential impact of a looming U.S. interest rate rise.

Templeton’s website showed that the investment trust’s share price had fallen 30 percent in the year to Sept. 30, 2015.

Reporting by Sujata Rao

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